Saturday, March 19, 2011

Another Possible Consequence of Japan's Nuclear Power Problems: The Rise of Coal?

The world has had only one week to digest the disturbing news about Japan's nuclear power problems. And a week hardly makes a lifetime.

But one thing is for sure -- coal may be on the way back as a power generating fuel source.

The well-regarded "Heard on the Street" business column in a recent issue of The Wall Street Journal (March 18, 2011) put it this way: "Rumors of coal's demise increasingly look premature. The commodity has plenty of critics, concerned about its environmental impact. But even more-pressing safety concerns about nuclear power, after Japan's earthquake, could lead countries to raise coal usage to make up for energy shortfalls."

The column went on to say, "There are clouds to this rapid reassessment of coal's prospects. Natural gas could prove a cleaner, more popular replacement for nuclear power. Nuclear capacity shutdowns might prove shorter than expected. And governments may also seek to promote other sources like wind and solar more strongly, although these remain higher in cost and less reliable than coal."

In the U.S. coal currently provides about half of total generating capacity.

This "reevaluation" of coal's role in U.S. electricity generation follows a piece several days ago in the Financial Times suggesting that renewable energy may also be in a better overall position as a result of the Japanese nuclear disaster.

Another footnote to the usage of U.S. coal -- something which may become much larger than just a footnote as time goes on -- is the rapidly increasing interest in China in importing U.S. coal from Montana and Wyoming (and Canada for that matter). This, too, is not bereft of critics. But China cannot simply rely on its own reserves to fuel, both figuratively and literally, its enormous market growth. Could there possibly be room for China and the U.S., both of which claim to be concerned to some degree about carbon emissions, to work together towards a way to burn coal more cleanly (which benefits both) while providing the U.S. an export market in China? It's probably too early to say with any certainty at this moment.

However, former British Prime Minister Harold Wilson used to say that a week is a long time in politics. One wonders whether this now applies as well to the energy generation sector.

Don SmithDirectorEnvironmental and Natural Resources Law & Policy Program